NU Online News Service, March 5, 11:49 a.m.EST

The longer the debate over the tax-sharing option within theNonadmitted and Reinsurance Reform Act rages, the better offthe surplus-lines industry is, say legislative-committee leaders ofthe National Association of Professional Surplus Lines Offices(NAPSLO).

At its midyear Leadership Forum in Scottsdale, Ariz., industryexecutives on the association's legislative committee updatedmembership on the NRRA, saying no tax-sharing agreement is betterthan a system without uniformity.

“The longer it takes [states] to implement, the longer the100-percent approach works,” says Brady R. Kelley, NAPSLO executivedirector.

NAPSLO supports the NRRA's main intent to require each state toadopt nationwide uniform requirements, forms and procedures for thereporting, payment, collection and allocation of surplus linespremiums taxes. However, although the association is not opposed totax-sharing, it is the option of the home state—and is not requiredby NRRA.

The competition among two tax-sharing arrangements (theNonadmitted Insurance Multistate Agreement and the Surplus LinesInsurance Multistate Compliance Compact) has caused a departurefrom the NRRA's intent to streamline processes and provideconsistency within the industry, NAPSLO says.

Therefore, no arrangement is superior to two inconsistent ones.Kelley says NAPSLO does not support multiple tax-sharingcontracts.

“That is not workable,” he says. “That is anything butuniform.”

The 100-percent approach—where each home state collects 100percent of the tax on every surplus lines policy—is the “clear,simple approach for our industry,” says James Drinkwater, presidentof the brokerage division of AmWINS and co-chair of the NAPSLOlegislative committee.

David E. Leonard, president of RSUI Group and co-chair withDrinkwater, says NAPSLO has been “pretty effective” in advisingstates of its opinion until a clear, uniform tax-sharing agreementis reached.

Nebraska recently withdrew from NIMA, Leonard reports, no onehas signed a contract with a clearinghouse, and there is no fundingto start such an operation.

NIMA, which NAPSLO strongly opposes, is “not the boon statesthought it was originally,” says Leonard.